Coalition: Wireless carriers won’t subsidize Cyren Call proposal
A coalition of high-tech companies this week released a report stating that the economics of Cyren Call Communications’ public-private partnership proposal for a nationwide network operating at 700 MHz are fundamentally flawed and would not attract interest from commercial wireless operators.
Cyren Call, led by Nextel Communications co-founder Morgan O’Brien, has proposed that 30 MHz of the 60 MHz of spectrum in the 700 MHz band scheduled to be auctioned by January 2008 instead be allocated to a public-safety broadband trust. The trust would pay as much as $5 billion for the airwaves, which the trust would lease to commercial operators agreeing to build and maintain public-safety-grade broadband networks nationwide.
Although the operators would be allowed to sell commercial services offered via the network when public safety didn’t need the spectrum, those opportunities are not enough to offset the costs operators would realize in trying to provide ubiquitous coverage for public safety, according to a Criterion Economics report.
“[Cyren Call] says, ‘Give us $7.5 billion worth of spectrum for $5 billion, and give us another $5 billion in government guaranteed borrowing authority, and we can do this thing without any additional money,’” said Criterion Chairman Jeffrey Eisenach said in an interview with MRT. “The underlying assumption is that the commercial sector is going to fund the buildout of the network and pay the bulk of the operating costs. What we’re saying is that the commercial sector isn’t going to do that.”
The Criterion report was paid for by the High Tech DTV Coalition, which believes the best course of action is to auction the 700 MHz spectrum as current law dictates.
“When you talk about having national resources to be applied to public-safety communications, the best way is to auction the spectrum available for commercial use to raise the maximum amount of money for the Treasury,” said Jeffrey Connaughton, executive director of the High Tech DTV Coalition. “Because those are the people who will bid the highest amount of money to put the spectrum to the highest and best use and raise upwards of $10 [billion] to $15 billion.”
After taking a decade to navigate myriad competing interests to enact the DTV Transition Act last year that established a February 2009 date for completing the transition, altering plans for the 700 MHz band at this juncture could cause multiple problems, said Brian Peters, director of government relations for the Information Technology Industry Council.
“Whenever you open up a legislative opportunity for anything, you’re inviting a lot of mischief,” Peters said. “If you open even the smallest door, you run the risk essentially of unraveling that delicate balance.”
Eisenach expressed support for the public-private network concept, particularly the one being proposed by the FCC that would pursue the notion within the 24 MHz already allocated to public safety instead of frequencies now earmarked for commercial uses. Commercial operators would welcome an opportunity to utilize public-safety spectrum, which could help government entities raise money to pay for first-responder networks.
But Congress should not consider the Cyren Call proposal, which Eisenach characterized as a “shell game” with a “hidden free lunch” of $10 billion.
“There is no difference, in concept, between what the Cyren Call folks are talking about and what the FCC is talking about—that is, you’ve got a certain amount of spectrum and public safety has a certain amount of need that takes precedence,” Eisenach said. “But, when public safety does not need that spectrum and there is unused spectrum, the commercial sector would be able to use that, and the commercial sector would be willing to pay something for that.
“Now, it’s not going to pay to build out a ubiquitous, nationwide network, but it certainly will pay something for it.”
Peters characterized the debate as a “red herring” while expressing the belief that public safety already has enough spectrum, so it does not need an additional 30 MHz.
“The [Cyren Call proposal] assumes that the 24 MHz on top of the 50 MHz at 4.9 GHz—something people aren’t talking about but should be—is not sufficient spectrum for public safety to meet all of its needs,” Peters said. “No government agency has come to that conclusion, as far as we can tell. The priority should be to get this 24 MHz out there and available, and getting it in use; not going back and revisiting whether that was enough. I think everybody has always believed that was enough.”
